In the wake of the Paris terrorist attacks that occurred late on Friday evening, the Australian dollar, like other risk assets, is under modest pressure in early Asian trade.
As at 8.30am AEDT, the AUD/USD currently buys .7124, largely unchanged from Friday’s closing level. In early trade the pair fell as low as .7105 before recovering on the back of buying against the euro and renewed speculation that the events in Paris may see the US Federal Reserve hold off on tightening interest rates in mid-December.
With no major domestic data releases scheduled during today’s Asian session, the Aussie will likely take its cues from investor sentiment, particularly in stocks.
“The atrocities will inevitable weigh heavily on market risk sentiment at the start of this week and, we’d suggest, is the type of event that could have the Fed re-thinking whether to tighten policy next month if global equity markets see a significant correction in coming days,” wrote NAB senior economist David de Garis in his morning note.
“We simply observe that there was no global equity market rout in the aftermath of the London underground terrorist bombings in July 2005. Neither did it interrupt the ‘quarter point per meeting’ Fed tightening cycle that commence in mid-2004 and ended in 2006.”
Aside from investor sentiment, markets will also be eyeing the release of Japanese Q3 GDP at 10.50am AEDT. Economists expect the economy to have shrunk 0.1% during the quarter, leaving the seasonally adjusted annual rate at -0.2%. If realised, it will be the second consecutive quarterly contraction, marking a technical recession.
Any figure significantly away from market consensus will likely move the Japanese yen, and as a consequence the Australian dollar.
Elsewhere markets will also receive Australian new motor vehicles sales for October (11.30am AEDT) along with New Zealand retail sales at 8.45am AEDT.
Here’s the current Aussie dollar scoreboard.
- AUD/USD 0.7124 , -0.0003 , -0.04%
- AUD/JPY 87.16 , 0.06 , 0.07%
- AUD/CNY 4.5405 , 0.0019 , 0.04%
- AUD/EUR 0.6636 , 0.0015 , 0.23%
- AUD/GBP 0.4678 , 0.0002 , 0.04%
- AUD/NZD 1.0853 , -0.002 , -0.18%
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